Today on Limitless Wealth TV, we're going to be talking about the pros and cons of flipping
real estate.
I get it, it's a hot topic, everyone's starting a TV show over it and today, me and my real
estate business partner, Steven Michael Miller, are going to jump in and share with you the
do's, the dont's, the pros and the cons.
Steven, I got a good idea.
You know what we're going to do?
We're going to start a TV show on fix and flip, dude.
Oh my gosh, fix and flip, get back in the shot, is one of the most glamorized concepts that
are out there right now.
Look at shows, they've done such an amazing job bringing real estate to the fore front.
- Fix this house, flip that house, flip you off, I don't know.
- It's alot of flipping.
And you know what's interesting about real estate is that I think that there's an immediate
draw because people are sick and tired of being in the grind, sick and tired of how
long it takes to just save some basic money as a hard working person and yet this idea
of wait, I can do something and in ninety days have $50,000, that's a super super compelling
idea.
- I think everyone is looking for that drop, it's going to happen, I'm going to win the
lottery, this is so exciting and that's kind of the draw, the fix ad flip crowd, I think
is, it's this idea that, yeah in a very short amount of time I can make a lot of money and
it's easy, I mean, you watch those shows and it takes some 30 minutes to flip a house,
right?
- One episode and it's done.
- And they get all this money then they get to put it in another one and you know, all
that glamour as the kind of situation.
- And what we're going to do today is, we're going to talk about three really important
pros and cons in fixing and flipping and that's coming from an individuals who have fixed
properties up.
We have flipped them, I have made money flipping homes and I have lost money flipping homes.
In fact, if I just take a moment and tell you a couple of really extreme cases, one
of the first videos that I did, one of the first five deals I did was actually a flip
and I made $20,000 on and I put in only a handful of hours, someone else do the work,
and I actually made $20,000 and I look back on that and for having just started out, that
was one of those glory moments of *grunts* I went in on another property that had $95,000
of profits, that's what I thought I was going to get and by the time the deal was done,
I only lost $5,000 - Oh that's good.
Only $5,000 - Which is incredible if you've actually heard some of the real horror stories
of flipping.
- But you keep the shirt on your back?
- I kept a shirt on my back but seriously, how is there a $100,000 discrepancy between
the money I thought I was going to make and then what reality ended up dishing out.
So flipping is, I just want to start out by saying like Steven said, it's high glamorized,
it's an idea that's super popular out there and what we want to debunk today is just say,
hey, let's just get in the trench and get real with the pros and cons of it and I want
you to understand, this is coming from a little bit of a slightly biased team.
Well, Steven and I, we have done thousands and thousands and thousands of properties
with our team and we have flipped none of them and there's a reason why, because we
have found a more consistent, more stable and more profitable concept while that works
for us and you can click the link and you can learn more about it.
We do really want to focus on this video on the pros and cons and we want to talk about
the big three right now.
- Yeah, so the first one is, big money now, the pro to a fix and flip is you can get a
lot of money right now.
Meaning in a very short amount of time, you can earn this kind of big purse and the better
you get at it, the more kind of get into the details and try to scrape and sink here and
the weeds there, the more you can make but the con is that sometimes it just doesn't
happen.
I mean, the reality is, so many people, as a matter of fact, I just want to talk about
this real quick, I had a couple, I was down in Denver, we were holding a wealth intensive
down there and we were talking to this couple, I was talking to this specific couple, he
came up to me and said, "Steven, we've implemented your system, we've used your power team and
it was amazing and then we want to go do some fix and flip."
And I said, "Great, that sounds exciting.
How did it go?"
And she said, "Well it went okay, we earned $25,000" And I said, "Wow, that's great!
Good job!"
She said, "Well, it wasn't really that great."
I said, "Well, that's a lot of money.
You know, you got that big pay day right?"
She said, "Yeah but we did the math."
I said, "What do you mean?"
She said, "Well, we put a lot of our own time and effort into and it took a lot longer that
we had thought it was going to take and that $20,000 we realized we actually ended up being
about $5.75 an hour for my husband and I." - $5.75 an hour?
- Sorry, I shouldn't laugh.
$5.75 an hour.
- Dude, you could have gone to McDonald's and more money working there.
- That's what I said to her.
- Really?
- I actually told her.
I know, it was maybe rude.
- Hey, if you're working fast food, don't worry.
We're going to help you get out of that.
- No, I want to drive the point at home.
I said, "Look, had you both gone and gotten job at McDonald's, you would have probably
doubled or tripled your investment."
So get people to get in fix and flip's because they think they're going to get a lot of money
right now but the reality is, often times, it gets stretched over to a long time frame
and that dollar per hour, it just doesn't work out to be big money.
- And you can make a lot of money.
In fact, I've got a couple of friends that flipping is what they do for living and they're
really good at it.
It requires massive knowledge base, good experience and you have to have an appetite for that
if you lose money, you need to be okay with that because there are some things that are
not always in your control with the flipping game.
Here are the three factors that you want to be considering..
One is time, two is effort, and three is money.
So let's talk about the three of these.
Steven, talk about the first one.
There's big money and big money can turn into small money and small money can turn into
you owe me money.
And so, that's what can happen in real estate and here's what I'm going to say, until you've
done five flips, please consider yourself an absolute beginner because these things
can go on your first or second property and the tides can turn pretty quick because you're
also dealing with a changing and evolving market.
How many homes are available in the market place, what's happening, is the market stalling
out because it's winter time, did you missed that on your own time frame, did you end up
eating into, did you sign some money for hard money, someone came in and you borrowed money
at 18% plus 2 points on the front and then things slowed down during the winter and you
didn't sell it til the spring and then you had to carry seven additional months on the
project then you thought you maybe would have.
A lot can turn into little.
Here's another way that a lot can turn into a little..
Whenever I have done a flip, and last year I did a flip and it actually turned out quite
profitable but it turned out $10,000 less profitable than expected because the more
work and effort you got to put into the project, the more risk there is that you didn't think
of something.
Basic cosmetic, that's pretty easy to calculate but the second you're getting in the structural
changes, that's where you start stepping into some unknowns and on this project, we came
up to some structural foreign proms and had to dump in an extra $10,000 in what $30,000
a profit and then turn it into $20,000 a profit and I probably would have done the deal had
I actually known that.
I had a team doing the whole thing.
Big money can turn into small money and it can happen in so many numerous ways that you
just need to be aware that when you're the beginner, you don't have the ability to think
through all of the different possibilities, experience will dictate some of that.
- Yeah, those situations come up all the time, by the way.
I mean, with the normal fix and flip, it's called a fix and flip and usually what you're
trying to do is you're trying to find all the different problems anyway.
And so when you begin to open up and take down walls and you get excited because you're
going to turn this like, worst property in the neighborhood into best property in the
neighborhood.
Sometimes that means opening up things that you probably would have hoped that you have
never opened up.
Pandora's box.
And so you take down a wall and all of sudden you see this pipe there that's in the middle
of the zone where you want it to be open concept, open floor plan, you just can't move it or
to move, it's going to cost you several thousand dollars more.
That's how $10,000 you had planned on easily be eaten up.
- Well and I also found that for everyone that's advertising a fix and flip that needs
30,000 or 20,000 of fix up, we're capable of going in and finding a better deal that
doesn't require that kind of fix up or cosmetic at most.
So money is the first factor, the second one is time.
We've been talking a little bit about this that, you know, we're talking about time in
a couple of ways.
One is, how much time are you going to have to put into it, how long will the project
take and often, these projects just take double or triple or quadruple amazingly enough, time
than what you originally factored and what that does is, if you thought that you were
going to be making a 20% ROI, you cut that by a factor of four, you're making a 5% ROI.
And so, when you're dealing with time, you just need to be able to factor it..
What is the value of your time?
Are you doing real estate as a job?
That brings us to number three which is effort.
Are you a hands on person or are you a hands off person because I always get worried when
one of our amazing friends from YouTube starts interacting with us and they're like, okay,
I want to get hands on, I want to go loads on home depot, I got all these stereos, I
got mad tiling skills and I'm a great carpenter and I'm a handyman.
And there's this idea that there's this, I think it's almost this romanticize idea that
I want to go on and fix this house up and so, we got some of you that you need to get
your hands dirty or else you're just not going to feel good and that's okay.
- You know what, I want to talk about this for just a moment cause I was actually on
the phone with someone just a couple of days ago and we were talking about the difference
between the hands on kind of experience or letting it kind of just be run by itself and
do its own thing and the way that we help people do real estate often and he said, you
know what I really just want to get my hands in there, I just want to get my hands dirty,
I like to kind of be in the mix and control things and I just want to caution you for
just a moment..
If you're thinking that you just want to get your hands in it, chances are, that stems
from this belief that it can't be done without you, alright.
It often times stems from this limitation of, in order for it to go and to be successful,
you have to have a hand in it, you have to be a part of it.
And the reality is, when you create a system like we have, Kris, where people can literally
step away.
Like people can just say, no it's just going go on auto-pilot and work for me.
If you could free up all of your time, because I think that's what most people are wanting,
that's why people are attracted to fix and flips because they think that the fix and
flip will free up time for them.
If I can help you free up time, if we can help you free up time, you don't have to get
your hands dirty, do you still want to?
Just a question.
- At the end of the day, you can put in less money that you think, you could put in less
time than you think and you can put in less effort than you think and that's a great recap
for this fix and flip video, which is, as we weight out the pros and cons of should
I or shouldn't I, listen, I'll do any deal at the right price, given the right circumstances
and the right , that's why I didn't flip last year.
But why for every flip am I doing hundreds of other deals?
Well, because at the end of the day, I can calculate the value of the time over return
and realize, what is the most profitable way for me to spend my time doing what I'm going
to do.
And the one last thing that I'm going to throw out there and conjunction, Steven dropped
a huge nugget on you talking about this mindset of I have to do it myself, I got to be in
control.
One of the things that we've learned that is if you want it done right, don't do it
yourself.
Are you ready to get started investing in real estate?
Click the link up here, contact me and my team and we're going to give you immediate
access to our inventory, I'll start showing you some of the deals that I've just recently
done and learn how you can do real estate with the lease time, the lease effort, the
lease risk and start making the most money right now and also, if you haven't already,
subscribe, ring the bell and we'll let you know when tomorrow's video is going to hit.